Developing countries are being prodded to support oil and mining companies disclosure of payments
the companies make to governments.

Yesterday, British Prime Minister Tony Blair unveiled the Statement of Principles and Actions for
the Extractive
Industries Transparency Initiative (EITI), which encourages oil and mining companies to
disclose the payments they make to the governments of countries where they operate. Currently,
host governments usually require extractive companies to conceal payments of taxes, royalties, and
signature bonuses. This practice often masks corruption and the siphoning of these funds from
public coffers. A coalition of 36 international institutional investors who manage almost $3
trillion in assets issued a statement in support of EITI.

"This unprecedented
support from the investment community demonstrates that good governance and transparency serve the
interests of the business community wherever it operates," Mr. Blair stated. "Better openness and
accountability are essential to securing the stability and prosperity that the developing world
needs, and on which our mutual business success depends."

EITI, which Mr. Blair launched
at the World Summit for Sustainable Development in Johannesburg, South Africa in September 2002,
points out "a close correlation between the countries rich in natural resources" and those plagued
with "high levels of poverty." Billionaire philanthropist George Soros, who backs the Publish What You Pay (PWYP) initiative
upon which EITI is based, calls this ironic phenomenon the "resource curse." PWYP, which was
established in December 1999 by Global
Witness and now includes more than 120 other nongovernmental organizations (NGOs), encourages
stock exchanges to require listed companies to disclose payments to governments where they extract
resources.

However, EITI differs from Publish What You Pay by focusing
not on listed companies, which own less than 20 percent of the world's oil reserves, but on the
host governments. This strategy avoids putting listed companies at a competitive disadvantage to
private companies, as well as a related dynamic, which Ms. Litvack refers to as the "first-mover
disadvantage." For example, BP (ticker: BP) decided to reveal
its $100 million signature bonus to Angola, a move that compromised future business dealings with
the country. BP hoped its competitors would follow suit, but none did.

Ms. Litvack said:
"Frankly, every company we spoke with said, 'give us a law that forces us and our competitors to
disclose, and we will be delighted to do so, but don't ask us to do something the local law doesn't
tell us to do, especially since the contracts we sign with these governments forbid us from
disclosing this information. You've got to persuade these governments to remove the
confidentiality clauses and force everyone to disclose.'"

EITI seeks to do exactly that,
though it is a matter of some sensitivity for developed countries such as the UK and US to tell
sovereign governments how to function.

"Some people have called it pseudo-Imperialism, the
fact that all these rich-country governments are getting together and telling these developing
countries, 'you really ought to change your laws,'" Ms. Litvack said. "This is always the dilemma
in the international political process: where do you draw the line between sovereignty and
fundamental human rights?"

Although resource-rich developing nations have yet to sign onto
EITI, eleven such countries have reportedly agreed to continue discussion over adopting the
initiative's principles. These countries include Azerbaijan, the Democratic Republic of Congo,
East Timor, Equatorial Guinea, Ghana, Indonesia, Kazakhstan, Mozambique, Sierra Leone, and Trinidad
and Tobago.

That these countries would agree to consider the "first world" dictations
may be influenced by the reliance on continued investment by global corporations, which ultimately
must answer to their stockowners. The investor statement thus played a key role in supporting this
stage of EITI's development.

"What amazed me is that organizations that have no history
of activism in governance issues, much less SRI issues, were signing our investor statement," said
Ms. Litvack. Fidelity Investments and Merrill Lynch Investment Managers signed
the statement. "They saw this as a bottom line issue, something that couldn't hurt and could only
help."